What is a "PIP"

"PIP" is an acronym and stands for "Price Interest Point" or sometimes called "Point In Percentage". A PIP is the smallest increment of change for a particular currency pair. In currency pairs that are quoted out to four decimal places a pip is the last decimal place. For example the EUR/USD pair is quoted as 1.0968 so 1 pip is the last decimal place or in this case the 8. So it would take a change of 100 pips to move the pair 1 cent.

One exception to this rule is the Yen currency pairs. The Yen currency pairs are displayed out to two decimal places but one pip is still represented by the last decimal place. So for example USD/JPY pair is quoted as 123.79 the second decimal place is one pip or in this case the 9.

Pip Value - Not all pips are equal

The PIP value for each currency pair will vary depending on the closing exchange rate of that pair. The dollar value of each pip will also vary depending on the size of your trade. Assuming we are trading in USD Dollars then all pair where the USD is the quote currency then 1 pip will have the same relative value. On pairs where the USD is not the quote currency the PIP value will be variable.

We will use one mini lot for our example and the USD/CHF pair as an example of this. Let’s say we bought 1 mini lot of USD/CHF at an exchange rate of 0.9500 (Buying $10,000 USD/Selling $9,500 CHF) and then sold our USD/CHF pair at 0.9600 for a profit of 100 PIPs.

To calculate our PIP value we first have to determine how many CHF (our quote currency) one pip represents based on our trade size.

10,000 x .0001 = 10 CHF per pip

The we divide the quote currency (CHF in this case) by the closing price of the pair to get the US Dollar value per PIP

10(CHF)/0.9600 = $1.0416 US Dollars per PIP

Then we Multiply the PIPs Profit by our PIP value

100 pips profit x $10.0416 = $104.16 Profit USD

Another example using EUR/USD. We will use one mini lot for our example and the EUR/USD pair as an example of this. Let’s say we bought 1 mini lot of EUR/USD at an exchange rate of 1.1000 (Buying 11,000 EUR / Selling 10,000 USD) and then sold our EUR/USD pair at 1.1100 for a profit of 100 PIPs.

To calculate our PIP value we first have to determine how many USD (our quote currency) one pip represents based on our trade size.

10,000 x .0001 = 1 USD per pip

The we divide the USD by the closing price of the pair to get the US Dollar value per PIP:

1/1 = $1 US Dollars per PIP

Then we Multiply the PIPs Profit by our PIP value

100 pips profit x $1 = $100.00 USD Profit

So in simple terms on all pairs where the USD is the quote currency one pip is equal to $1 per each mini lot purchased.

When we calculate the cross pair PIP value we have to add an additional step:

In this example we will use EUR/GPB. We will use one mini lot for our example and the EUR/GBP pair as an example of this. Let’s say we bought 1 mini lot of EUR/GBP at an exchange rate of 0.7000 (Buying 10,000 EUR / Selling 7,000 GBP) and then sold our EUR/GBP pair at 0.7100 for a profit of 100 PIPs.

To calculate our PIP value we first have to determine how many GBP (our quote currency) one pip represents based on our trade size.

10,000 x .0001 = 1 GBP per pip

The we divide the GBP by the closing price of the pair to get the US Dollar value per PIP:

1/1 = 1 GBP per PIP

Next we have to calculate our US Dollar PIP Value by multiplying the exchange rate of our account currency (USD) by the GBP/USD exchange rate (currently @ 1.5628).

1 GBP = 1.5628 USD so 1 PIP = $1.5628 USD

100 PIP x 1.5628 = $156.28 USD Profit

Michael Golembesky covers Forex, the S&P 500 and the VIX, contributing frequently to Avi's Market Alerts service at EWT while also hosting his own VIX Trade Alerts service and co-hosting the EWT Forex service. Learn more about Mike here and his services here.

Free 15-Day Trial

By signing up you agree to our terms and
privacy policy. You will receive access to our Trading Room,
plus account-related emails and our weekend e-newsletter containing news, updates & promotions from
ElliottWaveTrader. You can withdraw your consent at anytime.

OUR MEMBERS SAY ...

“Whomever has yet to join Avi's EWT Pinball on SA or his main site you guys are really missing unbelievable opportunities. Their analysis, analysts and the groups are superb. Imagine knowing back in 2016 the market had 2 years and 800 Points of upside in his analysis and charts and one would have confidentially bought the bottom. On the ElliottWaveTrader.net you can and will get 100's of different charts, perspectives and the ability to buy with confidence or even more important not to buy if a indices or security is topping and should and will head lower which allows you to short, take profits or wait for a pull back. Now for the best part when they see a stock which looks like it is about to break out or down they post it and I have watched and experience many 5x,10x and even 20x returns in a few hours out to 1-10 day returns. Avi, you, your team and site is really far above anything I could have even imagined.”

"dgnyc77" - SeekingAlpha2018-02-16

“This site is for teaching people to fish with the shark, not to get eaten. E-wave is not my main methodology, but seeing what the analysts have done here is pretty amazing. As a subscriber/observer I can say without exception that they give you the tools to make good choices.”

"bunker" - Trading Room2018-04-07

“you are certainly fortunate to have found this place. I know I count my blessings for finding it 3 1/2 years ago . . . now that you are part of EWT you will (should) realize how there are a countless great opportunities presented each day, week, month... this place is honestly the most wonderful online community and its mission is to help people and educate them...and keep them at this successfully "forever." ”

"Giuseppe" - Trading Room2017-01-06

“I appreciate your your insightful technical analytical focus on the market. I have been a financial advisor for 37 years, and I have NEVER felt comfort from fundamental analysis as a predictive tool on future market movement. I have mostly felt anxiety. Thank you, Avi, to you and your associates, for helping me sleep better at night, because I no longer have to be imprisoned by the capricious whims of the fundamental analysts and soothsayer economists. -John Martin, proud subscriber to Elliott Wave Trader for 9 months, but follower of Avi Gilbert for many years”

"john3148" - SeekingAlpha2017-03-27

“Avi I am truly amazed at how well you and all the analysts here have managed to call this market....it has been a sight to behold, been in markets 20 years now and have never seen such accurate prediction”

"Rossie" - Trading Room2017-12-17

“One thing I like about this site, is rookies like myself can rub shoulders (even if only electronically) with the pros and learn so much in a community setting where everyone helps each other in an environment of free flowing ideas and opinions! And, of course, we have a stand up no BS leader with a proven track record!”

"bullhammer" - Trading Room2016-10-22

“I met Avi in Miami in July 2013 ...The reason was I was tired of Robert Prechter of EWI negativity on the SPX...Avi and team brought a balanced and unemotional approach to the markets. As a 35 year veteran of trading.....I Highly recommend this service...”

"Jiffypop" - Trading Room2017-11-30

“I have been with many other advisors/subscriptions before I came here. You are THE BEST in this business. Please accept my heartfelt gratitude for all that you have done for me and my life. I cannot thank you enough.
Though sometimes I believe that you are 'supernaturally superior' in your analysis, it is your human-ness that I have come to admire the most. Most importantly, the fact that you sincerely and genuinely care for the financial well-being of members like us - that is astounding and touching. You are a huge gift to all of us.”

"PSK" - Trading Room2016-08-24

“I have optimizer and is a must-have for me to know the cheapest, optimal gain and implied volatility to consider before trading. Extensive video tutorials also. Leo is very knowledgeable but down-to-earth, -takes time to answer questions both simple and complex.”

"StoneEzel" - Trading Room2018-03-08

“Thanks Team - Return to date - all due to the team here. Avi, HD, Scooby etc...... AWESOME TEAM OF ANALYSTS. Rate of Return*** AS OF 04/30/2018 +27.93%”